<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 27, 1998...........................
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
FOR THE QUARTER ENDED COMMISSION FILE NUMBER
MARCH 27, 1998 1-10269
ALLERGAN, INC.
A DELAWARE CORPORATION IRS EMPLOYER IDENTIFICATION
95-1622442
2525 DUPONT DRIVE, IRVINE, CALIFORNIA 92612
TELEPHONE NUMBER 714/246-4500
Indicate by a check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
(1) [X] yes [ ] no
(2) [X] yes [ ] no
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
As of April 24, 1998 there were 65,731,899 shares of common stock outstanding.
1
<PAGE> 2
ALLERGAN, INC.
FORM 10-Q FOR THE QUARTER ENDED MARCH 27, 1998
INDEX
<TABLE>
<CAPTION>
Page
<S> <C>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
(A) Consolidated Statements of Earnings - 3
Three Months Ended March 27, 1998
and March 28, 1997
(B) Consolidated Balance Sheets - 4
March 27, 1998 and December 31, 1997
(C) Consolidated Statements of Cash Flows - 5
Three Months Ended March 27, 1998
and March 28, 1997
(D) Notes to Consolidated Financial Statements 6-8
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 9-12
PART II - OTHER INFORMATION
ITEM 4 13-14
ITEM 6 14
Signature 15
Exhibits
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
Allergan, Inc.
Consolidated Statements of Earnings
(In millions, except per share amounts)
<TABLE>
<CAPTION>
Three months
Ended
March 27, March 28,
1998 1997
-------- --------
<S> <C> <C>
Product Sales
Net sales $ 269.3 $ 256.2
Cost of sales 93.7 92.6
-------- --------
Product gross margin 175.6 163.6
Research Services
Research service revenues 9.6 3.1
Cost of research services 8.9 2.9
-------- --------
Research services margin 0.7 0.2
Operating costs and expenses
Selling, general and
administrative 118.4 111.9
Research and development 24.1 27.6
Contribution to ASTI 171.4 --
-------- --------
Operating income (loss) (137.6) 24.3
Nonoperating income (expense)
Interest income 2.9 1.8
Interest expense (3.0) (2.2)
Gain on investments, net 48.0 --
Contribution to Allergan Foundation (11.0) --
Other, net (1.5) 1.1
-------- --------
35.4 0.7
-------- --------
Earnings (loss) from continuing operations
before income taxes and
minority interest (102.2) 25.0
Provision for income taxes 20.1 7.3
Minority interest (0.1) (0.1)
-------- --------
Net earnings (loss) $ (122.2) $ 17.8
======== ========
Basic and diluted earnings (loss) per share $ (1.87) $ 0.27
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
Allergan, Inc.
Consolidated Balance Sheets
(In millions, except share data)
<TABLE>
<CAPTION>
March 27, December 31,
1998 1997
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents $ 113.8 $ 180.9
Trade receivables, net 187.7 187.0
Inventories 152.0 147.8
Other current assets 123.6 120.7
-------- --------
Total current assets 577.1 636.4
Investments and other assets 176.7 191.3
Property, plant and equipment, net 354.4 357.8
Goodwill and intangibles, net 208.4 213.4
-------- --------
Total assets $1,316.6 $1,398.9
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 90.3 $ 80.5
Accounts payable 64.2 83.3
Accrued expenses 152.9 167.0
Income taxes 54.5 32.5
-------- --------
Total current liabilities 361.9 363.3
Long-term debt 224.9 142.5
Other liabilities 51.8 51.7
Commitments and contingencies -- --
Stockholders' equity:
Preferred stock, $.01 par value; authorized
5,000,000 shares; none issued -- --
Common stock, $.01 par value; authorized
150,000,000 shares; issued 67,188,000
and 67,196,000 shares 0.7 0.7
Additional paid-in capital 207.7 208.1
Accumulated other comprehensive income 0.1 11.7
Retained earnings 513.4 670.8
-------- --------
721.9 891.3
Less - treasury stock, at cost
(1,641,000 and 1,903,000 shares) (43.9) (49.9)
-------- --------
Total stockholders' equity 678.0 841.4
-------- --------
Total liabilities and
stockholders' equity $1,316.6 $1,398.9
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
Allergan, Inc.
Consolidated Statements of Cash Flows
(In millions)
<TABLE>
<CAPTION>
Three months
Ended
March 27, March 28,
1998 1997
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings/(loss) $ (122.2) $ 17.8
Non-cash items included in net earnings (loss):
Depreciation and amortization 18.5 18.0
Amortization of prepaid royalties 2.4 2.3
Gain on investments (51.8) --
Contribution to Allergan Foundation 11.0 --
Deferred income taxes (3.0) 0.8
Loss on sale of assets 3.6 0.1
Expense of compensation plans 2.1 1.8
Minority interest (0.1) (0.1)
Adjustment in reporting of
foreign subsidiaries 0.7 --
Changes in assets and liabilities:
Trade receivables (2.6) 13.6
Inventories (5.0) (7.0)
Accounts payable (17.8) (6.3)
Accrued liabilities (1.6) (16.6)
Income taxes 17.6 (1.4)
Other (2.3) (7.3)
-------- --------
Net cash provided by/(used in)
operating activities (150.5) 15.7
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (8.3) (9.0)
Disposals of property, plant and equipment 0.5 1.1
Proceeds from sale of investments 40.8 --
Other, net (4.0) (7.0)
-------- --------
Net cash provided by/(used in)
investing activities 29.0 (14.9)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends to stockholders (8.4) (8.4)
ASTI dividend (28.6) --
Net borrowings under commercial
paper obligations 92.9 17.9
Decrease in notes payable (4.7) (3.0)
Sale of stock to employees 3.8 6.7
Increase in long term debt 3.6 2.5
Decrease in long term debt (0.6) --
Acquisition of capital leases -- (0.2)
Payments to acquire treasury stock -- (9.3)
-------- --------
Net cash provided by financing activities 58.0 6.2
-------- --------
Effect of exchange rates on cash and
equivalents (3.6) (1.4)
-------- --------
Net increase (decrease) in cash and equivalents (67.1) 5.6
Cash and equivalents at beginning of period 180.9 112.0
-------- --------
Cash and equivalents at end of period $ 113.8 $ 117.6
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
5
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Allergan, Inc.
Notes to Consolidated Financial Statements
1. In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments necessary (consisting only of
normal recurring accruals) to present fairly the financial information contained
therein. These statements do not include all disclosures required by generally
accepted accounting principles and should be read in conjunction with the
audited financial statements of the Company for the year ended December 31,
1997. The results of operations for the three months ended March 27, 1998 are
not necessarily indicative of the results to be expected for the year ending
December 31, 1998.
2. Components of inventory were:
<TABLE>
<CAPTION>
March 27, December 31,
1998 1997
-------- --------
(in millions)
<S> <C> <C>
Finished goods $ 102.7 $ 96.8
Work in process 17.6 15.7
Raw materials 31.7 35.3
-------- --------
Total $ 152.0 $ 147.8
======== ========
</TABLE>
3. Income taxes are determined using an estimated annual effective tax rate,
which is less than the U.S. Federal statutory rate, primarily because of lower
tax rates in Puerto Rico and in certain non U.S. jurisdictions. Withholding and
U.S. taxes have not been provided for unremitted earnings of certain non-U.S.
subsidiaries because such earnings are or will be reinvested in operations
outside the United States, or will be offset by appropriate credits for foreign
income taxes paid.
4. The Company is involved in various litigation and claims arising in the
normal course of business. The Company's management believes that liability with
respect to these matters would not have a material adverse effect on the
consolidated financial position and results of operations of the Company.
5. On April 21, 1998 the Board of Directors declared a quarterly cash dividend
of $0.13 per share, payable June 12, 1998 to stockholders of record on May 22,
1998.
6. In 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings per Share," (EPS) which
the Company adopted at the end of 1997. The new statement requires calculations
for "basic earnings per share" including only actual weighted shares outstanding
and "diluted earnings per share" including the effect of any common equivalent
shares or other items that are dilutive. All earnings per share amounts for all
prior periods have been restated to conform to SFAS No. 128 requirements.
6
<PAGE> 7
Allergan, Inc.
Notes to Consolidated Financial Statements (continued)
The reconciliations of the numerators and denominators of the basic and diluted
earnings per share computations in accordance with SFAS No. 128 are as follows:
<TABLE>
<CAPTION>
First Quarter
-------------------------------------------------------------------------------------------
1998 1997
(In millions, -------------------------------------------------------------------------------------------
except per Income Shares Per-Share Income Shares Per-Share
share data) (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------- ------------- ------ ----------- ------------- ------
<S> <C> <C> <C> <C> <C> <C>
Computation of
basic EPS:
Income (loss)
available to
common
stockholders $(122.2) 65.4 $(1.87) $ 17.8 65.5 $ 0.27
====== ======
Effect of
dilutive
options 0.0 0.6
------ ------
Computation of
diluted EPS:
Income (loss)
available to
common
stockholders
assuming $(122.2) 65.4 $(1.87) $ 17.8 66.1 $ 0.27
conversions ====== ===== ====== ======
</TABLE>
Options to purchase 5,106,000 shares of common stock at prices ranging from
$13.50 per share to $35.13 per share were outstanding since dates ranging from
April 27, 1988 through January 29, 1998. These options were not included in the
computation of diluted earnings per share at March 27, 1998 because the effect
would be antidilutive due to the loss for the period.
7
<PAGE> 8
Allergan, Inc.
Notes to Consolidated Financial Statements (continued)
7. In 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income" which is effective for fiscal years beginning
after December 15, 1997. SFAS No. 130 requires that the components of
comprehensive income be disclosed. Such amounts are as follows:
<TABLE>
<CAPTION>
March 27, 1998 March 28, 1997
---------------------------------------- ---------------------------------------
Tax Tax
Before-tax (expense) Net-of-tax Before-tax (expense) Net-of-tax
amount or benefit amount amount or benefit amount
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Foreign currency (0.3) -- (0.3) (8.2) -- (8.2)
translation
adjustments
Unrealized holding 30.7 (10.7) 20.0 (2.0) 0.7 (1.3)
gains/(losses)
arising during
period
Reclassification (48.0) 16.7 (31.3) -- -- --
adjustment for
gains realized in
net income
</TABLE>
8. In June 1997, SFAS No. 131 - "Disclosures about Segments of an Enterprise and
Related Information" was issued and is effective for periods beginning after
December 15, 1997. SFAS No. 131 establishes standards for reporting financial
and descriptive information regarding an enterprise's operating segments. In
February 1998, SFAS No. 132 - "Employee's Disclosure about Pension and Other
Postretirement Benefits" was issued and is effective for periods after December
15, 1997. SFAS No. 132 revises disclosures about pension and other
postretirement benefit plans. These standards increase disclosure in the
financial statements and will have no impact on the Company's financial position
or results of operations.
8
<PAGE> 9
ALLERGAN, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR THE QUARTER ENDED MARCH 27, 1998
RESULTS OF OPERATIONS
The following table compares 1998 and 1997 net sales by Product Line for the
first quarter periods:
<TABLE>
<CAPTION>
Three Months
Ended
--------------------------
March 27, March 28,
Net Sales by Product Line ($ millions): 1998 1997
--------- ---------
<S> <C> <C>
Specialty pharmaceuticals
Eye Care Pharmaceuticals $ 100.9 $ 93.3
Skin Care 15.7 13.5
Botox(R)/Neuromuscular 26.1 19.7
------- -------
142.7 126.5
Medical devices and OTC products
Ophthalmic Surgical 43.3 40.3
Optical Contact Lens Care 83.3 89.4
------- -------
Total Net Sales $ 269.3 $ 256.2
======= =======
</TABLE>
For the quarter ended March 27, 1998 total net sales increased by $13.1 million
or 5.1% to $269.3 million as compared to the first quarter of 1997. The impact
of foreign currency changes for the three month period ended March 27, 1998
decreased net sales by $11.7 million from the prior comparable period. Sales
growth excluding the impact of foreign exchange between the comparable quarters
was $24.8 million or 9.7%.
For the three months ended March 27, 1998, Eye Care Pharmaceuticals sales
increased $7.6 million or 8.1% from the comparable 1997 period. Excluding the
impact of foreign currency changes, sales increased by $11.0 million or 11.8%.
Sales in the United States increased $4.3 million in 1998. Sales in 1997 were
negatively impacted by higher than normal rates of product returns. An increase
in sales of Alphagan(R) solution for the treatment of glaucoma was offset by
decreases in other products as a result of increased generic competition. Sales
in international markets increased by $3.3 million in 1998, primarily as a
result of growth in sales of Alphagan(R).
Skin Care Pharmaceutical sales increased $2.2 million or 16.3% in the first
quarter of 1998. Sales growth in 1998 was the result of sales of Tazorac(R)/
Zorac(R), a topical gel used to treat psoriasis and acne, which was introduced
in 1997.
Botox(R) (Botulinum Toxin Type A) purified neurotoxin complex sales increased by
32.5% compared to 1997 to $26.1 million. The increase was the result of strong
growth in both the United States and international markets.
Surgical sales increased 7.4% in the first quarter of 1998 compared to the first
quarter of 1997. For the quarter, domestic sales increased 15.3% while
international sales increased 1.7%. Sales increased in all markets as a result
of increased demand for the SI-40 silicone intraocular lens (IOL) and sales of
the AMO(R) Array(R) multifocal IOL introduced in the United
9
<PAGE> 10
Allergan, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR THE QUARTER ENDED MARCH 27, 1998 (Continued)
RESULTS OF OPERATIONS (Continued)
States in the fourth quarter of 1997. Such increases were partially offset by
decreases in sales of PMMA IOLs and other silicone IOL models. Sales in
international markets increased by 10.3% excluding the weakening of foreign
currencies, particularly the Japanese yen.
Optical Lens Care net sales were $83.3 million for the three months ended March
27, 1998, a decrease of $6.1 million or 6.8% compared to the first quarter of
1997. Excluding the negative impact of foreign currency changes of $5.5 million,
sales decreased by $0.6 million or 0.7%. Domestic sales decreased by 27.2%. The
United States business was negatively impacted by the timing of promotional
activities in 1998 compared to 1997, and by a reduction of inventory in the
trade during the first quarter of 1998.
International sales increased by 0.6%. Excluding the impact of foreign currency
changes, international sales increased by 9.0%.
Allergan's gross margin percentage for the first quarter of 1998 was 65.2% of
net sales, which represents a 1.3 percentage point increase from the 63.9% rate
for the first quarter of 1997. The gross margin percentage increased in the
first quarter of 1998 compared to 1997 primarily as a result of shifts in the
mix of products sold to higher margin products including Botox(R) and eye care
pharmaceuticals. Gross margin in dollars increased over the first quarter of
1997 by $12.0 million or 7.3% as a result of the 5.1% increase in net sales and
by the 1.3 percentage point increase in gross margin percentage.
Operating income was a loss of $137.6 million for the first quarter of 1998.
Such loss included a charge of $171.4 million relating to a dividend of stock of
Allergan Specialty Therapeutics, Inc. (ASTI) to Allergan shareholders. ASTI is a
newly established company formed to conduct research and development of
potential pharmaceutical products based upon Allergan's retinoid and
neuroprotective technologies. Allergan contributed $200 million and certain
related technologies to ASTI prior to the dividend distribution. Excluding the
effect of the charge for the dividend distribution of ASTI stock of $171.4
million, operating income was $33.8 million in the first quarter of 1998, a $9.5
million or 39.1% increase over operating income of $24.3 million in the first
quarter of 1997. Adjusted operating income increased as a result of the $12.0
million increase in gross margin, and a $3.5 million decrease in research and
development offset by a $6.5 million increase in selling, general and
administrative expense. Research and development costs were decreased in the
first quarter of 1998 as a result of recovery from ASTI of $3.8 million in costs
incurred and expensed in the fourth quarter of 1997. Selling, general and
administrative expense increased in 1998 primarily as a result of increased
product launch expenses relating to Alphagan(R), Tazorac(R)/Zorac(R) and the
AMO(R) Array(R) IOL. Such increases were partially offset by $4.4 million in
technology fees received by Allergan from ASTI in the first quarter of 1998.
Allergan recorded a net loss of $122.2 million in the first quarter of 1998.
Excluding the effect of the $171.4 million charge relating to ASTI,
10
<PAGE> 11
Allergan, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR THE QUARTER ENDED MARCH 27, 1998 (Continued)
RESULTS OF OPERATIONS (Continued)
net earnings were $49.2 million, a $31.4 million or 176.4% increase over net
earnings of $17.8 million in the first quarter of 1997. Other non-operating
income in 1998 included three significant items. The Company realized a gain of
$51.8 million on its investment in Ocular Science, Inc. (OSI) stock. The Company
contributed a portion of its OSI stock to The Allergan Foundation, a recently
founded charitable foundation, resulting in a charge of $11.0 million. The
Company and the foundation sold their investments in OSI in the first quarter of
1998. The Company also recorded a charge of $3.8 million to recognize the
permanent impairment in value of certain other investments. Excluding the effect
of the charge relating to ASTI and the after tax effect of three significant
non-operating items discussed above, net earnings would have been $22.9 million,
a 28.6% increase over the first quarter of 1997. Such increase is primarily the
result of the increase in operating income excluding the effect of the charge
relating to ASTI, offset by an increase in currency losses of $2.1 million.
LIQUIDITY AND CAPITAL RESOURCES
As of March 27, 1998, the Company had a medium term note program and three
long-term credit facilities, one of which supports a commercial paper borrowing
arrangement. The note program allows the Company to issue up to an additional
$115 million in notes on a non-revolving basis. The credit facilities allow for
borrowings of up to $15.9 million through February 1999, $29.3 million through
December 1999, $2 million through 2001, and $289.7 million through 2003.
Borrowings under the credit facilities are subject to certain financial and
operating covenants, including a requirement that the Company maintain certain
financial ratios, and other customary covenants for credit facilities of similar
kind. As of March 27, 1998, the Company had $65.0 million in borrowings under
the note program and $85.8 million in borrowings under two of the credit
facilities. As of March 27, 1998 the Company has classified $69.0 million
borrowed under the credit facilities as a long-term debt based upon the
Company's ability to maintain such debt under terms of the credit facilities
described above. As of March 27, 1998, the Company had commercial paper
borrowings of $133.5 million.
The net cash used in operating activities for the three months ended March 27,
1998 was $150.5 million. Such amount includes the $171.4 million charge relating
to ASTI. Excluding such charge, cash provided by operating activities in the
first quarter of 1998 was $20.9 million compared to cash provided by operating
activities of $15.7 million for the respective 1997 period.
Cash provided by investing activities in the first quarter of 1998 was $29.0
million. Such amounts included $40.8 million in proceeds from sale of OSI stock.
Excluding this transaction, cash used in investing activities was $11.8 million
in the first quarter of 1998 compared to cash used in such activities of $14.9
million in the first quarter of 1997. The Company invested $8.3 million in new
facilities and equipment during the three months ended March 27, 1998 compared
to $9.0 million during the same period in 1997.
11
<PAGE> 12
Allergan, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR THE QUARTER ENDED MARCH 27, 1998 (Continued)
LIQUIDITY AND CAPITAL RESOURCES (Continued)
Cash provided by financing activities was $58.0 million in the three months
ended March 27, 1998 compared to $6.2 million cash provided by financing
activities in 1997. Borrowings, net of repayments of debt totaled $91.2 million
in the first quarter of 1998 compared to $17.4 million for the comparable period
in 1997. The increased borrowings in 1998 were used to make the contribution to
ASTI of $200 million. The balance of the amount contributed was provided by cash
from operations, the proceeds from the sale of OSI stock, and a reduction of
cash and equivalents. The amounts are net of dividend outflows of $37.0 million
in 1998 and $8.4 million in 1997. The 1998 dividends include $28.6 million
representing the dividend of ASTI stock to Allergan shareholders. The 1997
amount of cash provided by financing activity includes $9.3 million used to
repurchase treasury stock.
12
<PAGE> 13
Allergan, Inc.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
The annual meeting of stockholders of the registrant was held on April
21, 1998 at which three directors, constituting all of the Class III directors,
were re-elected to serve on the Board of Directors for a three year term until
the annual meeting of stockholders to be held in 2001. The names of the persons
elected as directors are as follows:
Handel E. Evans
Gavin S. Herbert
Henry Wendt
The terms of the following directors continued after the meeting:
Class I (term expires in 1999)
Howard E. Greene, Jr.
Lester J. Kaplan
Louis T. Rosso
Leonard D. Schaeffer
Class II (term expires in 2000)
Herbert W. Boyer
Tamara J. Erickson
William R. Grant
David E.I. Pyott
Three other matters were voted on, namely, approval of the Allergan, Inc.
Stock Price Incentive Plan, approval of the amended 1989 Nonemployee Director
Stock Plan and a stockholder proposal concerning cumulative voting. The
stockholder proposal was defeated and the other two matters were approved.
A summary of the voting follows:
<TABLE>
<CAPTION>
Broker
Directors For Withheld Non-votes
- --------- --- -------- ---------
<S> <C> <C> <C>
Handel E. Evans 56,368,469 1,406,481 0
Gavin S. Herbert 56,393,379 1,381,571 0
Henry Wendt 56,348,002 1,426,948 0
</TABLE>
<TABLE>
<CAPTION>
Broker
Other Matters For Against Abstain Non-votes
- ------------- --- ------- ------- ---------
<S> <C> <C> <C> <C>
Approval of Stock 51,266,612 6,350,048 158,290 0
Price Incentive Plan
Approval of Amended 43,646,465 13,913,497 214,988 0
1989 Nonemployee
Director Stock Plan
</TABLE>
13
<PAGE> 14
Allergan, Inc.
PART II - OTHER INFORMATION (Continued)
<TABLE>
<S> <C> <C> <C> <C>
Stockholder Proposal 15,223,589 37,608,192 391,179 4,551,990
Concerning
Cumulative Voting
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
- Exhibits
(numbered in accordance with Item 601 of Regulation S-K)
(10.1) Allergan, Inc. 1989 Nonemployee Director Stock Plan
(10.2) Technology License Agreement dated as of March 6,
1998 among Allergan, Inc. and certain of its affiliates and
Allergan Specialty Therapeutics, Inc.
(27) Financial Data Schedule
- Reports on Form 8-K. None.
14
<PAGE> 15
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: May 8, 1998 ALLERGAN, INC.
/s/ Francis R. Tunney, Jr.
-------------------------------
Francis R. Tunney, Jr.
Principal Financial Officer
15
<PAGE> 1
EXHIBIT 10.1
ALLERGAN, INC.
1989 NONEMPLOYEE DIRECTOR STOCK PLAN
(AS AMENDED AND RESTATED 1998)
I. GENERAL PROVISIONS
1.1 Purposes of Plan. Allergan, Inc. (the "Company") has adopted this 1989
Nonemployee Director Stock Plan (the "Plan") to enable the Company to attract
and retain the services of experienced and knowledgeable Nonemployee Directors
and to align further their interests with those of the stockholders of the
Company by providing for or increasing the proprietary interests of the
Nonemployee Directors in the Company.
1.2 Definitions. The following terms, when used in this Plan, shall have
the meanings set forth in this Section 1.2:
(a) "Award" means an award of Restricted Stock under the Plan.
(b) "Board" or "Board of Directors" means the Board of Directors of the
Company.
(c) "Change in Control" means the following and shall be deemed to occur
if any of the following events occur:
(i) Any "person," as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing
50% or more of the combined voting power of the Company's then outstanding
voting securities;
(ii) Individuals who, as of the date hereof, constitute the Board
of Directors (the "Incumbent Board"), cease for any reason to constitute at
least a majority of the Board, provided that any person becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Company's stockholders, is approved by a vote of at least a majority of the
directors then comprising the Incumbent Board (other than an election or
nomination of an individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the election of the
directors of the Company, as such terms are used Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) shall, for the purposes of this Plan, be
considered as though such person were a member of the Incumbent Board;
(iii) The stockholders of the Company approve a merger or
consolidation with any other corporation, other than
(A) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of another entity) more
<PAGE> 2
than 50% of the combined voting power of the voting securities of the Company or
such other entity outstanding immediately after such merger or consolidation,
and
(B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no person
acquires 50% or more of the combined voting power of the Company's then
outstanding voting securities; or
(iv) The stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or other disposition by
the Company of all or substantially all of the Company's assets.
Notwithstanding the preceding provisions of this Paragraph (c), a Change in
Control shall not be deemed to have occurred (1) if the "person" described in
the preceding provisions of this Paragraph, is an underwriter or underwriting
syndicate that has acquired the ownership of 50% or more of the combined voting
power of the Company's then outstanding voting securities solely in connection
with a public offering of the Company's securities or (2) if the "person"
described in the preceding provisions of this Paragraph is an employee stock
ownership plan or other employee benefit plan maintained by the Company (or any
of its affiliated companies) that is qualified under the provisions of the
Employee Retirement Income Security Act of 1974, as amended.
(d) "Common Stock" means the common stock, par value $.01 per share, of
the Company.
(e) "Company" means Allergan, Inc., a Delaware corporation, or any
successor thereto.
(f) "Nonemployee Director" means any member of the Board of Directors who
is not an employee of the Company or of a parent or subsidiary corporation (as
defined in Section 425 of the Internal Revenue Code) with respect to the
Company.
(g) "Participant" means any Nonemployee Director who receives an Award
pursuant to the terms of the Plan.
(h) "Plan" means the Allergan, Inc. 1989 Nonemployee Director Stock Plan
as set forth herein, as amended from time to time.
(i) "Restricted Stock" means Common Stock which is the subject of an Award
under this Plan and which is nontransferable and subject to a substantial risk
of forfeiture until specific conditions are met as set forth in this Plan.
1.3 Common Shares Subject to Plan.
(a) Subject to the provisions of Article IV and of this Section 1.3, the
maximum number of shares of Common Stock which may be issued or transferred
pursuant to Awards under this Plan shall not exceed 100,000 shares.
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<PAGE> 3
(b) The shares of Common Stock to be delivered under the Plan shall be
made available, at the discretion of the Board of Directors, either from
authorized but unissued shares of Common Stock or from shares of Common Stock
held by the Company as treasury shares, including shares purchased in the open
market.
(c) If, on or before termination of the Plan, any shares of Common Stock
subject to an Award shall not be issued or transferred and shall cease to be
issuable or transferable for any reason, or if such shares shall have been
reacquired by the Company pursuant to restrictions imposed on such shares under
the Plan, the shares not so issued or transferred and the shares so reacquired
shall not longer be charged against the limitation provided for in Paragraph (a)
of this Section 1.3 and may be again made the subject of Awards under this plan.
1.4 Administration of Plan.
(a) Subject to the provisions of Paragraph (b) below, this Plan shall be
administered by the Board of Directors. Awards under the Plan shall be automatic
as described elsewhere in this Plan. Subject to the provisions of this Plan, the
Board shall be authorized and empowered to do all things necessary or desirable
in connection with the administration.
(b) The Board, in its absolute discretion, may at any time and from time
to time delegate to a committee of three or more persons appointed by the Board
(the "Committee") all or any part of the authority, powers and discretion of the
Board under this Plan. Any determinations, decisions, interpretations, rules,
regulations or other actions of the Committee shall have the same effect as if
made or taken by the Board. Members of the Committee shall be subject to removal
at any time as determined by the Board, and the Board may at any time abolish
the entire Committee, in which case all authority, powers and discretion
delegated to the Committee shall immediately become revested in the Board. The
Board also may limit the Committee's authority and power at any time, in which
case any specified authority or power removed from the Committee shall
immediately become revested in the Board. No Nonemployee Director shall be
eligible to be a member of the Committee.
1.5 Participation. All Nonemployee Directors shall receive Awards under
this Plan, which Awards shall be granted automatically as provided in Section
2.1 below.
II. GRANTS OF RESTRICTED STOCK
2.1 Restricted Stock Awards -- Pre-1994.
(a) Immediately following the effective date of this Plan (as determined
pursuant to Section 5.2 hereof), each Nonemployee Director who is then serving
as a member of the Board of Directors shall automatically be granted an Award
consisting of a number of shares of Restricted Stock (rounded to the nearest
whole number of shares) equal to 1,000 multiplied by the Applicable Service
Fraction (as defined in Paragraph (c) below) with respect to such Nonemployee
Director determined as of the effective date of this Plan.
(b) Thereafter, each Nonemployee Director who is newly appointed or
elected to the Board for a full term of three years shall automatically be
granted an award consisting of 1,000
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<PAGE> 4
shares of Restricted Stock at the time such Nonemployee Director first joins the
Board. Such Award shall be made on the first business day following the date of
the regular annual meeting of stockholders of the Company, or any adjournment
thereof, at which directors are elected.
(c) Each Nonemployee Director who is appointed or elected to fulfill a
term of less than three years (whether by replacing a director who retires,
resigns or otherwise terminates his service as a director prior to the
expiration of this term or otherwise) shall automatically be granted an Award
consisting of a number of shares of Restricted Stock (rounded to the nearest
whole number of shares) equal to 1,000 multiplied by the Applicable Service
Fraction with respect to such Nonemployee Director determined as of the date of
such Nonemployee Director's appointment or election to the Board. Such Award
shall be made as of the first business day following the date of such
Nonemployee Director's appointment or election to the Board.
(d) Each Nonemployee Director who is re-elected (or, in the case of a
Nonemployee Director who was appointed to the Board and received an Award
pursuant to any of the preceding provisions of this Section 2.1 (an "Appointed
Director"), elected) to the Board for a full term of three years shall
automatically be granted an Award consisting of 700 shares of Restricted Stock
at the time of such Nonemployee Director's re-election (or, in the case of an
Appointed Director, election) to the Board. Such Award shall be made on the
first business day following the date of the annual meeting of stockholders of
the Company, or any adjournment thereof, at which directors of the Company are
elected.
(e) As used herein, "Applicable Service Fraction" means, with respect to
any Nonemployee Director, a fraction the numerator of which is the number of
months remaining in such Nonemployee Director's term at the time the Applicable
Service Fraction is to be determined pursuant hereto and the denominator of
which is 36.
2.2 Purchase Price. Participants under the Plan shall not be required to
pay any purchase price for the shares of Common Stock to be acquired pursuant to
an Award, unless otherwise required under applicable law or regulations for the
issuance of shares of Common Stock which are nontransferable and subject to a
substantial risk of forfeiture until specific conditions are met. If so
required, the price at which shares of Common Stock shall be sold to
Participants under this Plan pursuant to an Award shall be the minimum purchase
price required in such law or regulations, as determined by the Board in the
exercise of its sole discretion.
2.3 Terms of Payment. The purchase price, if any, of shares of Common
Stock sold by the Company hereunder shall be payable by the Participant in cash
at the time such award is granted.
2.4 Restricted Stock Awards -- 1994 and After. Effective as of immediately
prior to the 1994 Annual Meeting of Stockholders of the Company:
(a) No new Awards shall be made pursuant to the provisions of Section
2.1.
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<PAGE> 5
(b) Upon election, re-election or appointment of a Nonemployee Director
to the Board occurring at or after the 1994 Annual Meeting of Stockholders, such
Nonemployee Director shall automatically be granted an Award consisting of the
following number of shares of Restricted Stock: 600 multiplied by the number of
years which remain in the term of the person so elected, re-elected or
appointed. For purposes of such calculation, a year shall be the period between
annual meetings of stockholders of the Company or any part of such period
(exclusive of the 60 days immediately preceding the first annual meeting to be
held following such election, re-election or appointment giving rise to such
Award). For example, if a Nonemployee Director is appointed to the Board in
January of 1995 to serve a term which will expire at the 1997 Annual Meeting of
Stockholders (and the 1995 Annual Meeting of Stockholders is held more than 60
days after such appointment), the term of such person would be considered to be
three years for purposes of calculating the Award.
(c) Effective at the 1998 Annual Meeting of Stockholders, Sections
2.1(b) and 3.1(d)(v) are amended by changing all references to "600 shares" to
become "900 shares."
(d) Awards automatically granted pursuant to this Section 2.4 shall be
made on the first business day following the date of such election, re-election
or appointment, as applicable.
(e) At the 1998 Annual Meeting of Stockholders, a one-time grant of
5,000 shares of Restricted Stock shall be made to Dr. Herbert W. Boyer, Chairman
of the Board. Notwithstanding the reference in Section 3.1 (d)(v) to 900 shares,
for purposes of the one-time grant to Dr. Boyer, references to the 900 shares
will refer to 1,667, 1,667 and 1,666 shares at the Annual Meeting of
Stockholders in 1999, 2000 and 2001, respectively.
III. RESTRICTIONS ON GRANTED STOCK
3.1 Restrictions on Shares Issued. All shares of Common Stock granted
pursuant to an Award under this Plan shall be subject to the following
restrictions:
(a) The shares may not be sold, assigned, transferred, pledged,
hypothecated or otherwise disposed of, alienated or encumbered until the
restrictions set forth in Paragraph (b) below lapse and are removed as provided
in Paragraph (d) below, and any additional requirements or restrictions set
forth in or imposed pursuant to this Plan have been satisfied, terminated or
expressly waived by the Company in writing.
(b) In the event a Participant's service as a director of the Company
terminates for any reason other than death or total disability, all shares of
Common Stock acquired under this Plan by such Participant with respect to which,
at the date of such termination of service, the vesting restrictions imposed
under this Plan have not lapsed and been removed as provided in Paragraph (d)
below shall be returned to the Company forthwith, and all rights of the
Participant to such shares shall immediately terminate upon payment by the
Company to such Participant of the amount, if any, that the Participant paid to
the Company for such shares.
(c) In the event a Participant's service as a director of the Company
terminates because of death or total disability, the Participant shall not be
obligated to return any shares as described in Paragraph (b) above and, except
for any continuing and additional restrictions
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<PAGE> 6
which may exist as set forth in or imposed pursuant to this Plan, the vesting
restrictions imposed upon the shares of Common Stock acquired by such
Participant under this Plan shall lapse and be removed (and the shares of Common
Stock acquired by such Participant under Awards pursuant to the Plan shall vest)
upon such termination of service.
(d) The restrictions imposed under Paragraph (b) above shall lapse and
be removed (and the shares of Common Stock acquired by a Participant pursuant to
an Award shall vest) in accordance with the following rules:
(i) Subject to the provisions of Subparagraphs (iii) and (iv)
below, in the case of an Award granted pursuant to Paragraph (a) or (c) of
Section 2.1, as of the date of each regular annual meeting of stockholders of
the Company at which directors are to be elected following the date of such
Award, the vesting restrictions imposed under this Plan shall lapse and be
removed from such number of shares of Restricted Stock acquired pursuant to the
Award as is required to cause the aggregate number of shares of Common Stock
acquired pursuant to such Award with respect to which the vesting restrictions
imposed pursuant to this Plan have lapsed and been removed (and in which the
Participant shall be fully vested) to equal the number (rounded to the nearest
whole number of shares) computed by multiplying the total number of shares of
Restricted Stock that were initially the subject of such Award by the lesser of
(A) one or (b) a fraction the numerator of which is the number of months the
Participant has served as a member of the Board of Directors subsequent to the
date upon which the Award was granted and the denominator of which is the total
number of months in the term of such Nonemployee Director determined as of the
date upon which the Award was granted.
(ii) Subject to the provisions of Subparagraph (iii) and (iv)
below, in the case of an Award pursuant to Paragraph (b) or (d) of Section 2.1,
as of the date of each regular annual meeting of stockholders of the Company at
which directors are to be elected following the date of such Award, the vesting
restrictions imposed pursuant to this Plan shall lapse and be removed (and the
Participant shall be fully vested) with respect to one-third (rounded to the
nearest whole number) of the number of shares acquired by the Participant
pursuant to the Award, such that the restrictions shall lapse and be removed
(and the Participant shall be fully vested) with respect to all of the shares
acquired by the Participant pursuant to such Award as of the date of the third
such annual meeting of stockholders following the date upon which the Award is
granted.
(iii) Notwithstanding the provisions of Subparagraphs (i), (ii)
and (v) of this Section 3.1, in the event that a Participant's service as a
director of the Company terminates because of death or total disability, as of
the date of such termination of service the vesting restrictions imposed
pursuant to this Plan shall lapse and be removed (and the Participant shall be
fully vested) with respect to all shares of Common Stock acquired by such
Participant under Awards pursuant to this Plan.
(iv) Notwithstanding the provisions of Subparagraphs (i), (ii)
and (v) of this Section 3.1, in the event of a Change in Control, as of the date
of such Change in Control the vesting restrictions imposed pursuant to this Plan
shall lapse and be removed (and Participants shall be fully vested) with respect
to all shares of Common Stock acquired under Awards pursuant to this Plan.
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<PAGE> 7
(v) Subject to the provisions of Subparagraphs (iii) and (iv) of
this Section 3.1, Awards made pursuant to Section 2.4, as of the date of each
annual meeting of stockholders following the date of such Award, the vesting
restrictions imposed pursuant to this Plan shall lapse and be removed (and the
Participant shall be fully vested) with respect to 600 of the shares covered by
such Award.
3.2 Rights With Respect to Shares of Restricted Stock. A Nonemployee
Director to whom an Award has been made shall be notified of the Award, and upon
payment in full of the purchase price (if any) required for the shares of the
Restricted Stock, the Company shall promptly cause to be issued or transferred
to the name of the Nonemployee Director a certificate or certificates for the
number of shares of Restricted Stock granted, subject to the provisions of
Sections 3.3, 3.4 and 3.5 below. From and after the date of the Award, the
Nonemployee Director shall be a Participant and shall have all rights of
ownership with respect to such shares of Restricted Stock, including the right
to vote and to receive dividends and other distributions with respect thereto,
subject to the terms, conditions and restrictions described in this Plan.
3.3 Custody of Stock Certificates. In order to enforce the restrictions
imposed upon shares of Restricted Stock pursuant to this Plan, the Board may
require that the certificates representing such shares of Restricted Stock
remain in the physical custody of the Company until any or all of the
restrictions imposed pursuant to the Plan expire or shall have been removed.
3.4 Legends on Stock Certificates. The Board shall cause such legend or
legends making reference to the restrictions imposed hereunder to be placed on
certificates representing shares of Common Stock which are subject to
restrictions hereunder as the Board deems necessary or appropriate in order to
enforce the restrictions imposed upon shares of Restricted Stock issued pursuant
to Awards granted hereunder.
3.5 Securities Law Requirements. Shares of Common Stock shall not be
offered or issued under this Plan unless the offer, issuance and delivery of
such shares shall comply with all applicable provisions of law, domestic or
foreign, including, without limitation, the Securities Act of 1933, as amended,
the California Corporate Securities Law of 1968, as amended, and the
requirements of any stock exchange upon which the Common Stock may then be
listed. As a condition precedent to the issuance of shares of Common Stock
pursuant to an Award, the Company may require the Participant to take any
reasonable action to comply with such requirements.
IV. ADJUSTMENT PROVISIONS
4.1 Adjustments. If the outstanding shares of the Common Stock of the
Company are increased, decreased or exchanged for a different number or kind of
shares or other securities, or if additional shares or new or different shares
or other securities are distributed in respect of such shares of Common Stock
(or any stock or securities received with respect to such Common Stock), through
merger, consolidation, sale or exchange of all or substantially all of the
properties of the Company, reorganization, recapitalization, reclassification,
stock
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<PAGE> 8
dividend, stock split, reverse stock split, spin-off or other distribution in
respect of such shares of Common Stock (or any stock or securities received with
respect to such Common Stock), and appropriate and proportionate adjustment
shall be made in (i) the maximum number of securities provided in Section 1.3 of
the Plan, (ii) the number of shares to be included in each grant of Restricted
Stock of the Plan; (iii) the number and kind of shares then subject to
restrictions pursuant to Section 3.1 of the Plan, and (iv) the repurchase price,
if any, for each share of Common Stock subject to such restrictions. The Board's
determination of the adjustments required under this Section 4.1 shall be final,
binding and conclusive. No fractional interests shall be issued under the Plan
on account of any such adjustment.
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<PAGE> 9
V. MISCELLANEOUS PROVISIONS
5.1 Amendment, Suspension and Termination of Plan. The Board of Directors
may at any time amend, suspend, or terminate the Plan; provided, however, that
no such action shall deprive the holder of an Award of such Award without the
consent of such holder, and further provided that the nondiscretionary manner in
which Awards are made to Nonemployee Directors under Section 2.1 and Section 2.4
shall not be modified or amended (provided that the number of shares to be
included in each automatic grant thereunder may be changed with the approval of
the stockholders). Furthermore, no such amendment shall, without approval of the
stockholders of the Company, except as provided in Article IV hereof:
(a) increase the maximum number of shares specified in paragraph (a) of
Section 1.3;
(b) change the price of Common Stock specified in Section 2.2;
(c) change the terms of payment specified in Section 2.3;
(d) accelerate the restriction-removal schedule specified in Paragraph
(d) of Section 3.1;
(e) extend the duration of the Plan;
(f) materially modify the requirements as to eligibility for
participation in the Plan; or
(g) materially increase in any other way the benefits accruing to the
holder of an Award already granted or that subsequently may be granted under
this Plan.
Except as provided in Article IV, no termination, suspension or amendment
of this Plan may, without the consent of the holder thereof, affect Common Stock
previously acquired by a Participant pursuant to this Plan.
5.2 Effective Date and Duration of Plan. This Plan shall become effective
on the later of (a) the date of its approval by the Board of Directors of the
Company, (b) the date of its approval by the holders of the outstanding shares
of Common Stock (either by a vote of a majority of such outstanding shares
present in person or by proxy and entitled to vote at a meting of the
stockholders of the Company or by written consent), or (c) the date of the
distribution by SmithKline Beckman Corporation ("SKB") of the stock of the
Company pursuant to the terms of that certain Distribution Agreement, dated as
of April 11, 1989, among SKB, the Company and Beckman Instruments, Inc. Unless
previously terminated by the Board of Directors, this Plan shall terminate at
the close of business on December 31, 1999, and no Award may be granted under
the Plan thereafter, but such termination shall not affect any Award theretofore
granted and any shares of Common Stock granted pursuant thereto.
5.3 Additional Limitations on Common Stock. With respect to any shares of
Common Stock issued or transferred under any provisions of the Plan, such shares
may be
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<PAGE> 10
issued or transferred subject to such conditions, in addition to those
specifically provided in the Plan as the Board may direct.
5.4 Director Status. Nothing in this Plan or in any instrument executed
pursuant hereto shall confer upon any Nonemployee Director any right to continue
as a member of the Board of Directors of the Company or any subsidiary thereof
or shall interfere with or restrict the right of the Company or its stockholders
(or of a subsidiary or its stockholders, as the case may be) to terminate the
service of any Nonemployee Director at any time and for any reason whatsoever,
with or without good cause.
5.5 Securities Law Legends. In addition to any legend or legends pursuant
to Section 3.4 above, each certificate representing shares of Common Stock
issued under the Plan shall be endorsed with such legends as the Company may, in
its discretion, deem reasonably necessary or appropriate to comply with or give
notice of applicable federal and state securities laws.
5.6 No Entitlement to Shares. No Nonemployee Director (individually or as
a member of a group), and no beneficiary or other person claiming under or
through such Nonemployee Director, shall have any right, title, or interest in
or to any shares of Common Stock allocated or reserved for the purpose of the
Plan or subject to any Award except as to such shares of Common Stock, if any,
as shall have been issued or transferred to such Nonemployee Director. A
Nonemployee Director's rights to any shares of Common Stock issued or
transferred to the name of such Nonemployee Director pursuant to an Award under
this Plan shall be subject to such limitations and restrictions as are set forth
in or imposed pursuant to this Plan.
5.7 Withholding of Taxes. The Company may make such provisions as it deems
appropriate for the withholding by the Company of such amounts as the Company
determines it is required to withhold in connection with any Award. The Company
may require a Participant to satisfy any relevant tax requirements before
authorizing any issuance of Common Stock to such Participant. Any such
settlement shall be made in the form of cash, a certified or bank cashier's
check or such other form of consideration as is satisfactory to the Board.
5.8 Transferability. No award or right under this Plan, contingent or
otherwise, shall be assignable or otherwise transferable other than by will or
the laws of descent and distribution, or shall be subject to any encumbrance,
pledge or change or any nature. Any Award shall be accepted during a
Participant's lifetime only by the Participant or the Participant's guardian or
other legal representative.
5.9 Other Plans. Nothing in this Plan is intended to be a substitute for,
or shall preclude or limit the establishment or continuation of, any other plan,
practice or arrangement for the payment of compensation or benefits to directors
generally, which the Company now has or may hereafter lawfully put into effect,
including, without limitation, any retirement, pension, insurance, stock
purchase, incentive compensation or bonus plan.
5.10 Invalid Provisions. In the event that any provision of this Plan
document is found to be invalid or otherwise unenforceable under any applicable
law, such invalidity or
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<PAGE> 11
unenforceability shall not be construed as rendering any other provisions
contained herein invalid or unenforceable, and all such other provisions shall
be given full force and effect to the same extent as though the invalid or
unenforceable provision were not contained herein.
5.11 Singular, Plural; Gender. Whenever used herein, nouns in the singular
shall include the plural, and the masculine pronoun shall include the feminine
gender, as the context may require.
5.12 Applicable Law. This Plan shall be governed by, interpreted under,
and construed and enforced in accordance with the internal laws, and not the
laws relating to conflicts or choice of laws, of the State of California
applicable to agreements made and to be performed wholly within the State of
California.
5.13 Successors and Assigns of the Company. The Plan shall be binding upon
the successors and assignees of the Company.
5.14 Successors and Assigns of Participants. The provisions of this Plan
and any agreement executed upon the acquisition of shares hereunder shall be
binding upon each Participant in the Plan, and such Participant's heirs,
executors, administrators, personal representatives, transferees, assignees and
successors in interest.
5.15 Headings, Etc. Not Part of Plan. Heading of Articles and Sections
hereof are inserted for convenience and reference only, and they shall not
constitute a part of the Plan.
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EXHIBIT 10.2
TECHNOLOGY LICENSE AGREEMENT
This Technology License Agreement (this "Agreement") is made as of the
6th day of March, 1998 among Allergan, Inc., a Delaware corporation
("Allergan"), each Allergan Affiliate listed on the signature page hereto (an
"Allergan Affiliate") and Allergan Specialty Therapeutics, Inc., a Delaware
corporation ("ASTI").
BACKGROUND
A. ASTI has been formed for the purpose of researching and developing
human pharmaceutical products, including products using Allergan Technology (as
defined herein), and commercializing such products, most likely through
licensing to Allergan.
B. Allergan and ASTI have entered into the Research and Development
Agreement (as defined herein) for the research and development of such products
and related activities.
C. Allergan is willing to grant to ASTI a license to use Allergan
Technology solely for the purposes set forth above on the terms set forth herein
and in the Research and Development Agreement and the License Option Agreement
(as defined herein).
Now, therefore, the parties agree as follows:
1. DEFINITIONS.
For the purposes of this Agreement, the following terms shall have the
meanings set forth below:
1.1 "Affiliate" shall mean a corporation or any other entity that
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, the designated party. "Control"
shall mean ownership of at least 50% of the shares of stock entitled to vote for
the election of directors in the case of a corporation, and at least 50% of the
interests in profits in the case of a business entity other than a corporation.
1.2 "Allergan Technology" shall mean all Proprietary Rights, whether
patented or unpatented, owned by, licensed to or controlled by Allergan, as of
the date of this Agreement or during the term of the Research and Development
Agreement, relating to retinoid and neuroprotective technologies, including but
not limited to Tazarotene, Memantine and other glutamate and ion channel
blockers and Allergan's and each Allergan Affiliate's rights under the
agreements listed on Exhibit A hereto. "Allergan Technology" shall also include
any additional technology which Allergan designates expressly in a writing
delivered to ASTI as Allergan Technology for purposes of this Agreement.
Notwithstanding the foregoing, however, in no event shall "Allergan Technology"
include, and ASTI shall have no rights with respect to, (i) any topical
formulation of Tazarotene or the research, development, manufacture or
commercial sale
1.
<PAGE> 2
or other use thereof or (ii) the commercial sale of Memantine and/or products
incorporating or based on Memantine outside of the United States.
1.3 "ASTI Product" shall mean any dosage form of a compound which is the
subject of research and development as a potential human pharmaceutical product
which has been recommended by Allergan and accepted by ASTI's Board of Directors
for development as such under the Research and Development Agreement. Such
recommendations may be made on a Field of Use basis. The following compounds
have been selected as the initial ASTI Products as of the date hereof: (i)
Tazarotene (oral), (ii) Memantine, (iii) AGN 4310 and (iv) a compound to be
selected from the RAR alpha-selective agonist class of retinoid compounds for
the treatment of various cancers.
1.4 "Developed Technology" shall mean Proprietary Rights that (a) are
first generated, conceived or reduced to practice, as the case may be, by
Allergan or by any third party in the course of performing activities undertaken
pursuant to the Research and Development Agreement or (b) are, in any manner,
acquired by, or otherwise obtained on behalf of, ASTI during the term of the
Research and Development Agreement from persons other than Allergan and are
necessary or useful to the research, development or commercialization of ASTI
Products or Pre-Selection Products.
1.5 "Distribution" shall mean Allergan's distribution of all of the
outstanding shares of Class A Common Stock of ASTI to Allergan stockholders of
record on March 10, 1998.
1.6 "Field of Use" shall mean a particular disease state or set of
related disease states.
1.7 "Infringing Product" shall mean any product sold by a third party
which infringes or is alleged to infringe any patent or patents licensed to ASTI
hereunder and covering an ASTI Product.
1.8 "License Agreement" shall mean an exclusive license agreement for a
particular ASTI Product between Allergan and ASTI, entered into as a result of
Allergan's exercise of the License Option for such product.
1.9 "License Option" shall mean the option granted to Allergan pursuant
to the License Option Agreement.
1.10 "License Option Agreement" shall mean the License Option Agreement
dated as of the date hereof between Allergan and ASTI.
1.11 "Pre-Selection Work" shall mean research and pre-clinical
development work involving one or more product candidates owned or controlled by
Allergan or a third party funded by ASTI pursuant to the Research and
Development Agreement and undertaken in order to determine the suitability of
such candidate for research and development.
1.12 "Pre-Selection Product" shall mean a product, other than one which
becomes an ASTI Product, for which ASTI funds Pre-Selection Work.
2.
<PAGE> 3
1.13 "Pre-Existing Rights" shall mean the rights of each party other
than Allergan under the agreements listed on Exhibit A.
1.14 "Proprietary Rights" shall mean data, inventions, information,
processes, know-how and trade secrets, and patents or patent applications
claiming any of the foregoing, owned by, licensed to or controlled by a person
and which such person has the right to license or sublicense. Proprietary Rights
shall not include trademarks.
1.15 "Purchase Option" shall mean that certain option contained in
ASTI's Restated Certificate of Incorporation pursuant to which Allergan has the
right to purchase all of the outstanding shares of ASTI Class A Common Stock.
1.16 "Research and Development Agreement" shall mean the Research and
Development Agreement dated as of the date hereof between Allergan and ASTI.
1.17 "Therapeutic Agent" shall mean a drug, protein, peptide, gene,
compound or other pharmaceutically active ingredient.
2. LICENSE.
2.1 GRANT OF LICENSE. Allergan hereby grants to ASTI, on the terms and
conditions of this Agreement, a worldwide (except as set forth below), exclusive
license (subject to the Pre-Existing Rights), in perpetuity, with the right to
sublicense (as set forth below), to use the Allergan Technology to research and
develop ASTI Products, to conduct related activities (including Pre-Selection
Work), and to commercialize ASTI Products, but for no other purposes whatsoever;
provided, however, that, the foregoing license shall exclude (i) the research,
development, manufacture or commercial sale or other use of any topical
formulation of Tazarotene and (ii) the commercial sale of Memantine and/or
products incorporating or based on Memantine outside of the United States. ASTI
shall not sublicense any Allergan Technology to, or enter into other
arrangements with respect to any Allergan Technology with, any third party for
any purpose, except as set forth in Sections 2.2 and 2.3 hereof.
2.2 PERMITTED SUBLICENSES.
(a) Except as set forth in Section 2.2(b) hereof, ASTI may grant
sublicenses to Allergan and third parties to use the Allergan Technology solely
for the purpose of performing activities in connection with the research and
development of ASTI Products and conducting related activities (including
Pre-Selection Work); provided however, that, during the term of the Research and
Development Agreement, any such sublicenses shall be granted in accordance with
the terms of the Research and Development Agreement.
(b) If the License Option with respect to any ASTI Product in one
or more countries expires unexercised, from and after expiration of such License
Option in any such country, ASTI may sublicense Allergan Technology to a third
party or third parties solely to the extent necessary to complete the
development of, or to make (or have made) and use such ASTI Product, or to sell
(or have sold) such ASTI Product in such country.
3.
<PAGE> 4
2.3 CONDITIONS OF SUBLICENSES. Each sublicensee shall execute such
agreements as Allergan reasonably deems appropriate to protect the Allergan
Technology and to protect Allergan's rights under all agreements between
Allergan and ASTI and under the Purchase Option. Each sublicensee shall have all
the duties of ASTI hereunder with respect to such sublicense, and each
sublicensee shall acknowledge these duties to Allergan in writing. No sublicense
shall have the effect of relieving ASTI of any of its obligations hereunder.
2.4 PRIOR AND FUTURE GRANTS. ASTI understands and acknowledges that
Allergan is in the business of researching and developing products incorporating
the Allergan Technology for its own account and under arrangements with third
parties, and as a result, the license granted hereunder is limited strictly to
use the Allergan Technology for the purpose of researching and developing ASTI
Products and conducting related activities (including Pre-Selection Work) and
commercializing ASTI Products. ASTI acknowledges that Allergan may use and may
grant third party licenses to use the Allergan Technology for any and all other
purposes.
2.5 LICENSE TO ALLERGAN. In addition, in the event that Allergan
provides ASTI with a Reversion Notice (as such term is defined in Section 2.4 of
the Research and Development Agreement) with respect to a Pre-Selection Product,
ASTI hereby grants to Allergan, effective upon the date of such Reversion
Notice, a worldwide, exclusive (even as to ASTI), perpetual license, with the
right to sublicense, to conduct research and development with respect to such
Pre-Selection Product and to make, have made, use, sell, have sold, import and
export such Pre-Selection Product, subject to Allergan's obligation to pay
Pre-Selection Product Payments and Developed Technology Royalties (as such terms
are defined in the Research and Development Agreement).
3. COVENANTS OF ASTI.
3.1 DILIGENCE. ASTI promptly shall commence and shall use diligent
efforts to develop ASTI Products in accordance with approved work plans and cost
estimates under the Research and Development Agreement, subject to Allergan
diligently undertaking its obligations thereunder.
3.2 TECHNOLOGY FEE. ASTI shall pay Allergan in arrears the following
Technology Fee payments:
(a) $833,333 per month for the first twelve months following
October 23, 1997;
(b) $558,333 per month on the same day of each of the next twelve
months;
(c) $275,000 per month on the same day of each of the next twelve
months; and
(d) $166,667 per month on the same day of each of the next twelve
months;
provided, however, that ASTI shall no longer be obligated to make such payment
beginning with any month following the date on which the total number of ASTI
Products either under
4.
<PAGE> 5
development by ASTI pursuant to the Research and Development Agreement or
licensed to Allergan pursuant to Allergan's exercise of the License Option is
less than two.
3.3 PRE-EXISTING OBLIGATIONS. ASTI agrees to perform and timely
discharge all of Allergan's and/or each Allergan Affiliate's obligations and
duties under each of the agreements listed on Exhibit A, including but not
limited to any and all royalty, milestone, non-disclosure, patent filing and/or
prosecution license grant and/or license back and/or similar or related
obligations and duties.
4. PATENTS.
4.1 INFRINGEMENT. Each party shall promptly notify the other of any
infringement or alleged infringement known to such party of any patent covering
Allergan Technology, by the manufacture, development, use or sale by a third
party of any Infringing Product.
4.2 ACTION BY ALLERGAN. Subject to the provisions of the Research and
Development Agreement and any License Agreement, in the event of any such
alleged infringement, Allergan shall have the right, at its own expense and with
the right to all recoveries, to take appropriate action to restrain such alleged
infringement. If Allergan takes any such action, ASTI shall cooperate fully with
Allergan in its pursuit thereof, at Allergan's expense, to the extent reasonably
requested by Allergan. If Allergan brings an action under this Section 4.2, the
parties shall share equally any recoveries, after Allergan is reimbursed for its
expenses of bringing the action (including reasonable attorneys' fees).
4.3 ACTION BY ASTI. If (a) the Infringing Product is substantially
similar to an ASTI Product (in that the Infringing Product incorporates the same
active Therapeutic Agent or Agents as such ASTI Product and, in the case of an
ASTI Product that utilizes Allergan drug delivery technology, a drug delivery
system substantially similar to the Allergan drug delivery system) for which the
License Option has expired unexercised, and (b) within 90 days after the written
notice from either party described above (or at any time thereafter), Allergan
has not taken appropriate action to restrain such alleged infringement, and (c)
at such time, the annualized unit sales volume of such Infringing Product in a
country over a period of at least two calendar quarters, equals or exceeds 25%
of the annualized unit sales volume of the related ASTI Product in such country
during the same period, then ASTI shall have the right, at its own expense and
with the right to all recoveries, to take such action as it deems appropriate to
restrain such alleged infringement. If ASTI takes any such action, Allergan
shall cooperate with ASTI in its pursuit thereof, at ASTI's expense, to the
extent reasonably requested by ASTI. If the third party in any such action
brings a counteraction for invalidation or misuse of a patent covering the
Allergan Technology or the ASTI Product, ASTI shall promptly notify Allergan,
and Allergan may, within six months after the notification, join and participate
in such action at its own expense. ASTI shall not settle any such action
relating to any alleged infringement which in any manner would adversely affect
Allergan Technology without the prior written consent of Allergan.
5.
<PAGE> 6
5. CONFIDENTIALITY OF INFORMATION.
5.1 CONFIDENTIALITY. During the term of this Agreement and for a period
of ten years following its termination, ASTI shall maintain in confidence all
Allergan Technology; provided, however, that nothing contained herein shall
prevent ASTI from disclosing any Allergan Technology to the extent such Allergan
Technology (a) is required to be disclosed in connection with researching or
developing ASTI Products, conducting Pre-Selection Work, conducting related
activities, securing necessary governmental authorization for the marketing of
ASTI Products, or directly or indirectly making, using or selling ASTI Products,
as permitted or provided for in the agreements between the parties, (b) is
required to be disclosed by law for the purpose of complying with governmental
regulations, (c) is disclosed in connection with any sublicense permitted
hereunder, (d) is known to or used by ASTI prior to the date hereof (other than
through disclosure by or on behalf of Allergan) as evidenced by ASTI's written
records, (e) is lawfully disclosed to ASTI by a third party having the right to
disclose such information to ASTI, or (f) either before or after the time of
disclosure to ASTI, becomes known to the public other than by an unauthorized
act or omission of ASTI or any of ASTI's employees or agents. Any disclosure of
Allergan Technology to third parties shall be made subject to similar
obligations of confidentiality on the part of such third parties. The
obligations of ASTI pursuant to this Section 5.1 shall survive the termination
of this Agreement for any reason. Any breach of this Section 5.1 may result in
irreparable harm to Allergan, and in the event of a breach, Allergan shall be
entitled to seek injunctive relief (without the need to post a bond) in addition
to any other remedies available at law or in equity.
6. DISCLAIMER.
6.1 DISCLAIMER CONCERNING ALLERGAN TECHNOLOGY. ALLERGAN DISCLAIMS ANY
EXPRESS OR IMPLIED WARRANTY (A) THAT ANY ALLERGAN TECHNOLOGY, OR THE USE
THEREOF, OR ANY PRODUCTS INCORPORATING OR MANUFACTURED BY THE USE THEREOF, WILL
BE FREE FROM CLAIMS OF PATENT INFRINGEMENT, INTERFERENCE OR UNLAWFUL USE OF
PROPRIETARY INFORMATION OF ANY THIRD PARTY AND (B) OF THE ACCURACY, RELIABILITY,
TECHNOLOGICAL OR COMMERCIAL VALUE, COMPREHENSIVENESS OR MERCHANTABILITY OF THE
ALLERGAN TECHNOLOGY OR ITS SUITABILITY OR FITNESS FOR ANY PURPOSE WHATSOEVER
INCLUDING, WITHOUT LIMITATION, THE DESIGN, RESEARCH, DEVELOPMENT, MANUFACTURE,
USE OR SALE OF PRODUCTS. ALLERGAN DISCLAIMS ALL OTHER WARRANTIES OF WHATEVER
NATURE, EXPRESS OR IMPLIED.
7. REPORTS OF ADVERSE REACTIONS.
7.1 REPORTS OF ADVERSE REACTIONS. During the term of this Agreement,
each party shall promptly inform the other party of any information that it
obtains or develops regarding the efficacy or safety of an ASTI Product and
shall promptly report to the other party any information or notice of adverse or
unexpected reactions or side effects related to the utilization or medical
administration of an ASTI Product. Further, during the term of this Agreement,
each party shall promptly inform the other of any information that it obtains or
develops regarding the safety of
6.
<PAGE> 7
any Allergan Technology as related to the ASTI Products. Each such party shall
permit the other to comply with the adverse reaction reporting obligations under
the United States Food, Drug and Cosmetic Act, or similar statutory provisions,
and regulations thereunder and shall assist the other party in complying
therewith, with respect to the ASTI Products. When appropriate, the parties will
execute a standard operating procedure to cover the foregoing. ASTI agrees and
acknowledges that Allergan may provide information it obtains under this Section
7.1 to Allergan's other clients developing and/or commercializing products
incorporating the same Allergan drug delivery systems as are incorporated in the
ASTI Products.
8. EFFECTIVE DATE; TERMINATION.
8.1 EFFECTIVE DATE. This Agreement shall become effective on the date of
the Distribution.
8.2 TERMINATION FOR BREACH. Either party may terminate this Agreement
effective upon the giving of written notice of such termination to the other
party in the event such other party breaches any of its material obligations
hereunder or under the License Option Agreement and such breach continues for a
period of 60 days after written notice thereof by the terminating party to the
other party.
8.3 AUTOMATIC TERMINATION. This Agreement shall automatically terminate
upon termination by ASTI of the Research and Development Agreement other than
due to a breach by Allergan, or upon termination by Allergan of the Research and
Development Agreement due to a breach by ASTI.
8.4 TERMINATION OF SUBLICENSES. Termination by Allergan of this
Agreement shall automatically terminate any sublicenses granted by ASTI
hereunder.
9. FORCE MAJEURE.
9.1 FORCE MAJEURE. Neither party to this Agreement shall be liable for
failure or delay in the performance of any of its obligations hereunder if such
failure or delay is due to causes beyond its reasonable control, including,
without limitation, acts of God, earthquakes, fires, strikes, acts of war, or
intervention of any governmental authority, but any such delay or failure shall
be remedied by such party as soon as possible after the removal of the cause of
such failure or delay.
10. INDEMNIFICATION.
10.1 INDEMNITY. ASTI shall indemnify, defend and hold Allergan harmless
from and against any and all liabilities, claims, demands, damages, costs,
expenses or money judgments incurred by or rendered against Allergan and its
Affiliates, which arise out of the use, design, labeling, manufacture,
processing, packaging, sale or commercialization of the ASTI Products by ASTI,
its Affiliates and permitted subcontractors and sublicensees (other than
Allergan and its Affiliates, subcontractors, sublicensees, distributors and
others operating under arrangements with or through Allergan). Allergan shall
permit ASTI's attorneys, at ASTI's discretion and cost, to control the defense
of any claims or suits as to which Allergan may be entitled to indemnity
7.
<PAGE> 8
hereunder, and Allergan agrees not to settle any such claims or suits without
the prior written consent of ASTI. Allergan shall have the right to participate,
at its own expense, in the defense of any such claim or demand to the extent it
so desires.
10.2 NOTICE. Allergan shall give ASTI prompt notice in writing, in the
manner set forth in Section 11.7 below, of any claim or demand made against
Allergan for which Allergan may be entitled to indemnification under Section
10.1.
11. MISCELLANEOUS.
11.1 WAIVER, REMEDIES AND AMENDMENT. Any waiver by either party hereto
of a breach of any provisions of this Agreement shall not be implied and shall
not be valid unless such waiver is recited in writing and signed by such party.
Failure of any party to require, in one or more instances, performance by the
other party in strict accordance with the terms and conditions of this Agreement
shall not be deemed a waiver or relinquishment of the future performance of any
such terms or conditions or of any other terms and conditions of this Agreement.
A waiver by either party of any term or condition of this Agreement shall not be
deemed or construed to be a waiver of any other term or condition of this
Agreement. All rights, remedies, undertakings, obligations and agreements
contained in this Agreement shall be cumulative and none of them shall be a
limitation of any other remedy, right, undertaking, obligation or agreement of
either party. This Agreement may not be amended except in a writing signed by
both parties.
11.2 ASSIGNMENT. Neither party may assign its rights and obligations
hereunder without the prior written consent of the other party, which consent
may not be unreasonably withheld; provided, however, that Allergan may assign
such rights and obligations hereunder to an Affiliate of Allergan or to any
person or entity with which Allergan is merged or consolidated or which acquires
all or substantially all of the assets of Allergan.
11.3 DISPUTE RESOLUTION. In the event of any dispute, the parties shall
refer such dispute to the CEO of ASTI and the CEO of Allergan for attempted
resolution by good faith negotiations within sixty (60) days after such referral
is made. During such period of good faith negotiations, any applicable time
periods under this Agreement shall be tolled. In the event such executives are
unable to resolve such dispute within such sixty (60) day period, the parties
shall submit their dispute to binding arbitration before a retired California
Superior Court Judge at J.A.M.S./Endispute located in Orange, California, such
arbitration to be conducted pursuant to the J.A.M.S./Endispute procedure rules
for commercial disputes then in effect. The award of the arbitrator shall
include an award of reasonable attorneys' fees and costs to the prevailing
party.
11.4 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute this Agreement.
11.5 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the state of California as applied to residents of
that state entering into contracts to be performed in that state.
8.
<PAGE> 9
11.6 HEADINGS. The section headings contained in this Agreement are
included for convenience only and form no part of the Agreement between the
parties.
11.7 NOTICES. Notices required under this Agreement shall be in writing
and sent by registered or certified mail, postage prepaid, or by facsimile and
confirmed by registered or certified mail, postage prepaid, and addressed as
follows:
If to Allergan
and/or any
Allergan Affiliate: Allergan, Inc.
2525 Dupont Drive
Irvine, CA 92612
Facsimile: (714) 246-4774
Attention: Corporate Vice President, General Counsel
If to ASTI: Allergan Specialty Therapeutics, Inc.
2525 Dupont Drive
Irvine, CA 92612
Facsimile: (714) 246-4774
Attention: President and Chief Executive Officer
All notices shall be deemed to be effective five days after the date of
mailing or upon receipt if sent by facsimile (but only if followed by certified
or registered confirmation). Either party may change the address at which notice
is to be received by written notice pursuant to this Section 11.7.
11.8 SEVERABILITY. If any provision of this Agreement is held by a court
of competent jurisdiction to be invalid or unenforceable, it shall be modified,
if possible, to the minimum extent necessary to make it valid and enforceable
or, if such modification is not possible, it shall be stricken and the remaining
provisions shall remain in full force and effect.
11.9 RELATIONSHIP OF THE PARTIES. For purposes of this Agreement, ASTI
and Allergan shall be deemed to be independent contractors, and anything in this
Agreement to the contrary notwithstanding, nothing herein shall be deemed to
constitute ASTI and Allergan as partners, joint venturers, co owners, an
association or any entity separate and apart from each party itself, nor shall
this Agreement constitute any party hereto an employee or agent, legal or
otherwise, of the other party for any purposes whatsoever. Neither party hereto
is authorized to make any statements or representations on behalf of the other
party or in any way obligate the other party, except as expressly authorized in
writing by the other party. Anything in this Agreement to the contrary
notwithstanding, no party hereto shall assume or be liable for any liabilities
or obligations of the other party, whether past, present or future.
11.10 SURVIVAL. The provisions of Sections 1, 5, 6, 7, 10, 11.1, 11.3,
11.5, 11.6, 11.7, 11.8, 11.9 and this Section 11.10 shall survive the
termination for any reason of this Agreement. Any payments due under this
Agreement with respect to any period prior to its termination shall be made
notwithstanding the termination of this Agreement. Neither party shall be liable
to the
9.
<PAGE> 10
other due to the termination of this Agreement as provided herein, whether in
loss of good will, anticipated profits or otherwise.
10.
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
ALLERGAN SPECIALTY
THERAPEUTICS, INC.
By: /s/ LESTER J. KAPLAN
----------------------------------
Title: Chief Executive Officer
-------------------------------
ALLERGAN, INC.
By: /s/ LESTER J. KAPLAN
----------------------------------
Title: Corporate Vice President, Research & Technology
-----------------------------------------------
ALLERGAN AFFILIATES:
ALLERGAN AMERICA, INC.
By: /s/ SUSAN J. GLASS
----------------------------------
Title: Assistant Secretary
-------------------------------
ALLERGAN PHARMACEUTICALS (IRELAND) LTD., INC.
By: /s/ SUSAN J. GLASS
----------------------------------
Title: Assistant Secretary
-------------------------------
VISION PHARMACEUTICALS, L.P.
A Texas limited partnership, dba Allergan,
by Allergan General, Inc.,
its general partner
By: /s/ SUSAN J. GLASS
----------------------------------
Title: Assistant Secretary
-------------------------------
11.
<PAGE> 12
EXHIBIT A
Exclusive License Agreement dated August 23, 1995 among Children's Medical
Center Corporation, Allergan, Allergan America, Inc. ("Allergan America") and
Allergan Pharmaceuticals (Ireland) Ltd., Inc. ("Allergan-Ireland").
License and Supply Agreement dated February 28, 1997 among Merz + Co. GmbH &
Co., Vision Pharmaceuticals L.P. ("Vision"), Allergan America, Allergan-Ireland
and Allergan.
Collaborative Research, Development and Marketing Agreement dated November
20, 1996 between Cambridge NeuroScience, Inc. and Vision.
Amended and Restated Technology Cross License Agreement dated September 24,
1997 among Ligand Pharmaceuticals Incorporated, Allergan and Allergan Ligand
Retinoid Therapeutics, Inc.
Cross License Agreement dated March 6, 1998 among Allergan, Allergan
America, Allergan-Ireland and Vision.
12.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF EARNINGS AND BALANCE SHEETS OF ALLERGAN, INC. AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-27-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 113,800
<SECURITIES> 0
<RECEIVABLES> 195,600
<ALLOWANCES> 7,900
<INVENTORY> 152,000
<CURRENT-ASSETS> 577,100
<PP&E> 610,600
<DEPRECIATION> 256,200
<TOTAL-ASSETS> 1,316,600
<CURRENT-LIABILITIES> 361,900
<BONDS> 224,900
0
0
<COMMON> 700
<OTHER-SE> 677,300
<TOTAL-LIABILITY-AND-EQUITY> 1,316,600
<SALES> 269,300
<TOTAL-REVENUES> 278,900
<CGS> 93,700
<TOTAL-COSTS> 102,600
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,130
<INTEREST-EXPENSE> 3,000
<INCOME-PRETAX> (102,200)
<INCOME-TAX> 20,100
<INCOME-CONTINUING> (122,200)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (122,200)
<EPS-PRIMARY> $(1.87)
<EPS-DILUTED> $(1.87)
</TABLE>
